Reference no: EM132761841

Home Nonsense makes many different products. One of the most popular is a coffee table made from knotty pine. The standard cost card for the product follows:

DM (5.63 board feet @ $6.50 per board foot) $36.59
DL (2.31 hours @ $22.45 per hour) 51.86
VOH (.45 MH @ 1.56 per MH) .70
FOH (.45 MH @ 12.66 per MH) 5.70
Unit cost $94.85

• The DM price standard is based on invoice price assuming grade A lumber and the highest available quantity discount. It is adjusted for shipping and insurance. The DM quantity standard is based on product specifications adjusted by waste due to cutting around imperfections and weak spots as well as potential production errors. During November, the firm produced 4,500 units. It purchased 50,000 board feet of knotty pine, which cost $336,900. 22,980 board feet were used in production.

• The DL rate standard is the hourly wage of the employees who make the coffee tables including benefits and payroll taxes. The DL quantity standard is based on time and motion studies adjusted by waste assessments along with productivity assumptions and potential production errors. During November, hours worked on coffee tables were 9,980. Total payroll related to these hours was $225,700.

Overhead is applied on the basis of machine-hours.

Problem 1: Compute the two DM variances. Label well.

Problem 2: Compute the two DL variances. Label well.